Anniversary of TIme Inc. Auto Renewal Settlement - Brokerblogger

We are coming up on the one year anniversary (3/06) of "The TIme Inc. Auto Renewal Settlement". An 11/1/06 article (no longer available online) said: "Time Inc. agreed to pay $4.5 million to cover investigative costs, divided by the 23 states, in addition to $4.3 million in estimated customer claims." It goes on to say: "The possibility of serious government attention and action regarding automatic renewal, or “continuous service” as it’s often more euphemistically expressed, was not unexpected by the industry."

While that settlement was mostly (or all) about print subscriptions, I see no important differences in what the basic reasons are for the complaints that are now surfacing over Internet related auto-renewal abuses. With the recent announcements by anti-virus software companies saying they are going to "auto-renewal" subscriptions, it is almost like sellers want to "test the waters" all over again in order to get their renewal rates higher.

The article tries to play down the affects of the settlement, since the trend at the time of writing this article was, supposedly, less "auto-renewals" in the marketplace due to various reasons. This is not the case now, at least with anti-virus software.

What also struck me was this: "So far, nothing earth-shaking. But there are a few items in the settlement that do give pause. First, there’s the provision that states, “[Time Inc.] for the next five years, [will] provide consumers the option to affirmatively choose an automatic renewal option.”This certainly sounds like a “positive option,” as in separate “Yes/No” option boxes, which anyone who has worked in this industry for more than a few months knows is a response killer. The “for the next five years” phrase would seem to verify the punitive character of this provision, and also that it may not generally apply to other marketers." The author is implying that some of the provisions of that settlement are "no big deal" by saying "nothing earth-shaking". But, I love that he admits that a "Yes/No" consumer choice option is a known "response killer". Most consumers, when given a clear, conspicuous choice don't want to be automatically renewed even with many reminders, since they want to keep their options open, and not risk being charged for something they don't want anymore for whatever reason. The "..may not generally apply to other marketers."is a stretch, in my opinion.

The next part that struck me is a classic reason why the law says "Buyer Beware" vs. "Seller Beware": "But this is a point where consulting your legal counsel is crucial, because as with the definition of “clear and conspicuous disclosures” there is some latitude of interpretation, depending on the history and context of your communications with and promotions to subscribers. If the terms of an automatic renewal offer are clearly presented, in the context of an approach that communicates “automatic renewal is the way we handle subscription service now, and by accepting this offer you agree to it,” then wouldn’t that qualify as “affirmatively choosing”?"Obviously, the focus here is on "some latitude of interpretation" vs. what is truly best for the consumer (and the seller, if the sellers are long term thinkers). This "get away with it, if you legally can" kind of thinking is "OLD SCHOOL"! With "WORD OF MOUTH" on the Internet, bad news for buyers, and about sellers, travels faster than ever! Unscrupulous buyer tactics should be exposed on the Internet, also!

In the "Conclusions" last section it says: "Beyond the particulars of the Time Inc. case, though, all marketers should heed the signal sent by the attorneys general regarding the overall imperative for clear and conspicuous disclosure of all offer details, as a means for making sure consumers fully understand what they are ordering and paying for." My contention is that the FTC should mandate that sellers provide for "making sure consumers fully understand what they are ordering and paying for" at each and every renewal date through a "Return Receipt" e-mail that has to be received back with consumer acceptance by the seller before the "auto-renewal" legally kicks in.

I actually believe it is best for buyers and sellers, if the seller does a "multi-term" (mult-year, etc.) subscription right upfront with a discount to consumers by signing up for longer than the shortest term. The seller could clearly and conspicuously disclose upfront that "No Refund Will Be Allowed Upon Early Cancellation in Consideration of the Discounted Price". This would cut renewal expenses, avoid misunderstandings with irate customers trying to get a refund, keep accounting complexities to a minimum, keep the FTC off the seller's back, and help the consumer, who initially figures that he/she will benefit from a long term subscription renewal, save some money!

2/810 UPDATE: Well, it looks like my predictions of Auto-Renewal causing problems have come true three years later with this PC Advisor article: "Symantec sued over Norton Antivirus auto-renewals" It should be interesting to see if Symantec can legally prove that they did, in fact, notifiy the complaintant of their Auto-Renewal.